AIG drops a lawsuit vs NY Fed over Maiden Lane -filing

May 30, 2013|Reuters

May 30 (Reuters) - American International Group Inc has agreed to drop litigation against the Federal Reserve Bankof New York over who has the right to sue over losses sufferedby the insurer on residential mortgage-related securities.

The insurer and Maiden Lane II, a vehicle created by theFederal Reserve Bank of New York to buy troubled RMBS from theinsurer, agreed to dismiss the case without prejudice, accordingto a May 28 court order, which was made public on Thursday.

At issue was whether AIG had assigned to Maiden Lane II itsright to sue over losses on RMBS it sold to that entity.

Earlier this month, in a case involving Bank of AmericaCorp's Countrywide unit, a federal judge in Californiasaid AIG may sue over RMBS sold to Maiden Lane II.

"In light of the recent ruling that AIG did not assign itsfraud claims to ML II, we have agreed to dismiss our declaratoryjudgment action, without prejudice to our right to reinstituteit if necessary," AIG spokesman James Ankner said.